IrelandManual

Reverse Charge in Ireland

Reverse charge for non-established companies in Ireland

According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses.

Ireland has introduced this reverse charge on certain supplies. Domestic supplies of services performed by a non-established supplier in Ireland fall into the reverse charge mechanism provided that the requirement are met:

  • Supplier requirements
    Non-established supplier.
  • Customer requirements
    A taxable person with an Irish VAT number.
  • Scope
    Domestic supplies of services.

    Supplies of goods with installation.

Check the Legal Guidance about reverse charge on supplies made by non-established companies. Also, reverse charge by non-established suppliers is regulated in Section 12 of the Irish VAT Act. Also, find here and here more information about reverse charge in Ireland.

Separately, find here further guidance on reverse charge applicable to supplies of goods with installation or assembly in Ireland. The customer may be urged to VAT register in the country to account for VAT.

When it comes to construction services, provided that the non-establish trade is engaged in the construction operations as subcontractor, reverse charge applies. The principal contractor must account for the VAT due. In such a case, the non-established business would avoid a VAT registration.

  • Supplier requirements
    Non-established supplier acting as subcontractor.
  • Customer requirements
    A taxable person acting as a principal contractor in a construction service.
  • Scope
    Domestic supplies of construction services.

Check here the official guidance about construction services by non-established suppliers in Ireland.

An additional scenario consists of non-established traders supplying gas through the natural gas system or electricity:

  • Supplier requirements
    Non-established supplier.
  • Customer requirements
    A taxable person, a Department of State or local authority, a body established by statute.
  • Scope
    Domestic supplies of gas through the natural gas system or electricity.

Check here the official guidance about supplies of natural gas by non-established suppliers in Ireland.

When reverse charge applies, the trader must mention in the invoice to the buyer that reverse charge applies (wording "reversed tax liability" or in the local language).

Reverse charge on B2B services

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.

According to the general B2B rule, any business resident outside Ireland supplying services to an Irish based customer will not charge any VAT and the transaction will be reverse charged by the customer.

There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Ireland provided the following conditions are met:

  • Services connected to immoveable property are located where the property is located.
  • Passenger transport services will be located where the transport takes places (apportioned if necessary).
  • Catering services are located where the catering takes place.
  • Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
  • Access to conferences, fairs and exhibitions is located where the event takes place.

The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.

Find out more about the rules for B2B services in the EU here. Also, find here and here official information by the Irish tax authorities.

Reverse charge on specific goods and services in Ireland

Domestic reverse charge may also apply to domestic supplies of certain goods and services made by companies in Ireland. The following reverse charge scenarios apply irrespective of the country of establishment of the Supplier:

  • Supplies of CO2 or greenhouse emission allowances.
  • Supplies of scrap metal. Find here more information.
  • Supplies in the construction industry to a principal contractor by a subcontractor, regardless of the status of the subcontractor as established or non-established business in Ireland.
  • Supply of construction work in Ireland between two connected persons.

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